NFIB/RI: Higher Minimum Wage is Bad but Mishmash of Local Rates would be Worse

Date: June 17, 2014

Providence (June 17, 2014) – The day after Rhode Island was ranked by small business owners
as the worst state in the country, lawmakers risk validating that assessment by
raising the state minimum wage for the third time in three years, said the National
Federation of Independent Business (NFIB) today.

“Rhode Island’s disadvantages
are largely self-inflicted and raising the minimum wage without imposing some
uniformity would be another big mistake,” said NFIB State Director Bill
Vernon.

A House committee yesterday
approved a bill that would raise the minimum wage from $8 to $9, the third
increase in three years, an increase of 12.5 percent in a state that currently
has the highest unemployment rates in the country. That would be hard
enough on struggling Rhode Island businesses, said Vernon. But unless a
companion bill is signed into law to prevent municipalities like Providence
from passing even more aggressive wage hikes,
small businesses could face real trouble.

“That would make a bad
situation much worse for small businesses in Rhode Island,” he said.
“Allowing local jurisdictions to create their own wage rates will create a
mishmash of ordinances and a real compliance headache for businesses with a few
locations around the state.”

Businesses in Providence, for
example, where activists are pushing for a $15 local minimum wage, would be
made immediately less competitive than their counterparts in other
jurisdictions. That would create a powerful incentive for businesses to
leave or avoid the capital city, said Vernon.

“Providence has serious
economic and fiscal problems and they would be aggravated by the exodus of
small businesses that would be driven out by much higher labor costs,” said
Vernon. “It would also create an administrative headache for businesses
with multiple locations.

“Many businesses with
multiple locations shuttle employees between them,” he explained. “It
will be extremely costly and time consuming to determine how they should be
paid based on where they work every week within a small state.”

Vernon said that lawmakers in
Providence should stop trying to compete with Massachusetts, which is
notoriously hard on businesses, to see who can create the least hospitable
economic climate.

“Rhode Island is a much
smaller economy, which means it has less room for error,” said Vernon.
“They should be moving in the opposite direction.”